Lyndon H. LaRouche, Jr. was the main speaker in Rome on July 2, 2002, at an EIR conference, convened to discuss the world strategic and economic crisis and ways to build support for his "New Bretton Woods" policy. LaRouche was joined on the podium by Dr. Nino Galloni, an economist and director general of the Italian Labor Ministery, and by Sen. Oskar Peterlini, initiator of a Parliamentary motion calling for a New Bretton Woods conference. The speakers were introduced by Paolo Raimondi, chairman of the Italian Solidarity movement.

The conference took place at the Sala Auditorium at the Basilica of Santa Maria degli Angeli, before an audience of more 100 economic experts, academic representatives, diplomats, journalists, and students. The expectation was high and the prominent guest met it. LaRouche explained how the current strategic and economic-financial crisis is the product of policies imposed on the world by what he calls the "utopian faction" in the United States, the same faction which President Eisenhower referred to, in his last speech, as "the military-industrial complex." This faction, whose philosophical outlook stems from the tradition of H.G. Wells and Bertrand Russell, emerged first after the death of Franklin D. Roosevelt, when Roosevelt successor Harry Truman repealed the peace negotiations policy with Japan started under Roosevelt, and took the militarily useless decision to drop two nuclear bombs on Japan.

The utopian policy is best expressed in a document signed by Henry Kissinger, called National Security Study Memorandum 200, produced in 1974 and originally classified. That paper argued that non-Anglophone nations with strong demographic growth were going to consume and exhaust resources which were destined otherwise to be consumed by the Anglophone world—and, the paper said, it was incumbent on the U.S. government to make sure that this did not occur.

The same policy was restated under Carter, in the document called Global 2000. Today, the utopian faction is committed to establish a world Anglophone empire, based on the model of the Roman Empire, through a policy of perpetual war.

But they made a mistake, LaRouche said: They decided to launch the empire not at the beginning, as Rome did, but at the end, when the empire is already collapsing. The world economy is collapsing and only a return to policies on the principle of the General Welfare, LaRouche explained, can save it. If we compare the two periods, the post-1945 Bretton Woods agreement that prevailed until 1962-65, and the successive phases, especially after the formal breakup of the Bretton Woods agreements in 1971, it is evident which system worked, and which did not.

With all its flaws, the Bretton Woods system made it possible to rebuild Europe after World War II, to develop Central and South America and other parts of the world. Today, we must build a new system based on the Bretton Woods model: fixed parities among world currencies, guaranteed by a gold reserve (different from the British system of the gold standard) and a policy of long-term, low-interest credits to launch international development projects.

The Bush Presidency, LaRouche said, has lost any credibility after the President's speech of June 24 and developments of June 26. It is up to persons in responsible places in the United States and Europe, to rally the population in support of this policy. We must do this, LaRouche said to his audience, despite the fact that people are opinionated, stubborn, and unwilling to abandon prejudices which are leading them towards their doom. It is the task of leaders to tell the truth, and stop the practice of retailing only what are considered accepted opinions.

Dr. Nino Galloni presented aspects of his economic work, aiming to show how the current economic system is doomed. Globalization was already finished, before Sept. 11, Galloni said, even if what happened that day gave the U.S. government the pretext to start reversing globalizaton policies. One of those principally responsible for the economic collapse is the International Monetary Fund, an institution whose mission, as contemplated by the original architects of Bretton Woods, was entirely different from what it became. Originally, the IMF was supposed to help developing countries to settle their trade imbalances, created by the necessity to import from industrial economies the capital goods, machinery, and equipment necessary to start an independent industrial development.

But instead of doing this, the IMF betrayed its mission and started simply to finance debt incurred for other purposes, including financial debt. Galloni showed how imbalances grew bigger and bigger, due to a lack of policies for industrial development. The same mechanism hit some industrial countries, like Italy in the '70s—countries which were forced to devalue their currencies and increase interest rates to attract capital flows.

Galloni spoke polemically against the general attitude of political parties, NGO (non-governmental organizations), and other movements which today campaign against poverty and hunger in the Third World, but refuse to face and to reverse the causes of this poverty in the world.

Dr. Galloni then focussed on an area of his special competence: how neoliberal policies are destroying the labor market and pension systems. Neoliberal reforms in these sectors, in fact, stand on two pillars: so-called "flexibilization" and privatization. Flexibilization means that, in order to reduce production costs, laws have been introduced allowing firms to dismiss (through early retirement) older workers, and to employ younger people who earn only 50% of what the older, more experienced workers made. This scheme is literally blowing up a pension system which is already under stress.

Because of zero population growth, the Italian people—who are in the worst such situation, demographically, in Europe—are getting old. It has been calculated that in 2014, the point will be reached when the retired population will be equal to the active labor force. This means that the active 50% will have to pay the pensions for the other 50%, in addition to paying contributions for their own future pensions. But how can this be possible, when future workers will earn, at best, 70% of today's wages, due to the "flexibilization" schemes we have introduced today?

The solution, Galloni said, is to stop thinking in monetary terms. A pension system can work only if we have a situation in which the active part of the labor force is producing, in physical terms, enough to maintain themselves and the retired population. Or, put another way, it can work only if during his active lifetime, the worker has contributed to increasing the productivity of the nation in physical terms, so that, when he retires, he can enjoy the fruit of his work in terms of higher benefits coming from the economy.

Dr. Galloni's presentation created the context for Senator Peterlini, who built up a system of pension funds in his region, Trentino-Alto Adige (South Tyrol), before becoming a member of the Italian Senate. Peterlini showed, with charts and graphics, the dilemma the pension funds face today: If they invest the money of their members in "secure" assets, like government bonds, they will lose customers because they cannot promise a high yield; if, however, they invest in (presumably) high-yeld assets, they are exposed to the inevitable collapse of the stock and capital markets. To save pensions, Peterlini said, it is therefore indispensable that the world financial and monetary system be reorganized.

Through his association with the LaRouche movement, Peterlini has drafted a motion—a platform—calling for just such a reorganization, which was presented in the Parliament at the end of February, and has drawn remarkable support. In the Senate, prominent names like former Prime Minister Giulio Andreotti, or former Labor Minister Cesare Salvi, signed the document; in the House (Chamber of Deputies), former Ministers Maccanico, Melandri, and Treu, as well as current Defense Committee chairman Ramponi, signed.

More than 100 members of both branches of Parliament have signed the platform, of which Peterlini read some excerpts. The motion called on the Italian government to "take the initiative to propose the convocation of a new international conference among heads of state and government ... in order to establish a new international monetary system, and take the measures necessary to eliminate the mechanisms which have allowed the creation of the speculative financial bubble, and the systemic financial crash."

LaRouche was asked by moderator Raimondi to offer his views on how a pension system should work, and he stressed that in a healthy system, with a low-interest-rate policy and a regulated capital market, pension funds would find it profitable to invest in government bonds or in bonds issued by utilities, guaranteed by central and local government.

The leader of an Italian consumers' organization asked LaRouche to comment on the current private nature of central banks such as the U.S. Federal Reserve. They are, LaRouche said, a legacy of aristocratic power which has survived the birth of modern Constitutional states. The United States had a short but extremely successful experience with national creation of money, during the Civil War, through the famous "greenback" created by Lincoln to finance the war and the building of infrastructure. Europe was inspired by this reconstruction to launch its own industrial development. But then, the Specie Resumption Act was introduced in the United States, and not long after, the Federal Reserve System was created, which is anti-Constitutional.

According to the U.S. Constitution, LaRouche said, only the Congress can authorize the government to order the Treasury to issue money. In a New Bretton Woods system this must be addressed. We will have national money creation as a form of credit which will reach the economy through the private banking system, directed only to the kinds of infrastructure and productive projects indicated by governments.

A well-known lawyer asked if behind the attempts to prevent a dollar-euro parity there are efforts by London, which has not joined the European single currency. Dr. Galloni answered that, in principle, "to think bad of the British is never a sin, as my brother, who is a missionary priest, always tells me." However, he added, we must not miss the point that the euro rises against the dollar not because the euro is strong, but because the dollar is weak.

The representative of a Palestinian Catholic organization asked LaRouche to comment on American policy on the Israeli-Palestinian conflict, to which LaRouche gave a long and elaborated answer. The basis for a peace settlement remains the Oslo agreement, LaRouche said. The problem with the Oslo agreements started first, when the World Bank took over the economic side of the accords, and sabotaged it. Secondly, when Israeli Prime Minister Rabin was assassinated in 1995. Thirdly, Clinton's last effort failed because Clinton let himself be duped by Ehud Barak, allowing him to introduce the issue of the Temple Mount, on which Ariel Sharon later staged a crucial provocation.

Today, the U.S. government is backing a government of Israel led by those "politically responsible for the Rabin assassination." There is no solution in the Middle East outside of an ecumenical dialogue. The question of sovereignty over the Holy Places must be regulated according to the principle that all world faiths (Jewish, Christian, and Muslim) must have access to the holy places. And this can be settled only through a real ecumenical dialogue similar to the one currently led by the Pope.

LaRouche spent several days in Rome meeting political, religious, and institutional leaders, reporting, among other things, on his recent visits to Abu Dhabi and to Brazil.

During the postwar period, from the time of the death of Franklin Roosevelt, until approximately the middle of the 1960s, there were two systems functioning throughout the Americas, as a whole, in Europe, and in Japan, and elsewhere. One was the system launched by President Franklin Roosevelt, which was the new Bretton Woods. What was accomplished afterwards, for the new Bretton Woods, was not entirely what Roosevelt had intended, but large aspects of the policy were implemented. This aspect of the postwar reconstruction of the Americas, of Europe, Japan, and elsewhere, was generally successful, was not necessarily just, but it was successful, from an economic standpoint.

During the same period, a different, opposite tendency was in motion, a utopian tendency, whose ultimate aim was a new military policy, under which the English-speaking powers would eventually take over the world, in the form of a new English-speaking Roman Empire. As long as Eisenhower was in sight, the memory of Franklin Roosevelt was fresh. Until Eisenhower left office as President, the utopian faction was growing in influence around air power--ideas of air power, and so forth--but it was in check, as the Suez Crisis illustrates. Eisenhower would not put up with those utopians he identified in his concluding speech as President, as the "military-industrial complex."

So, this is the way the world ran outside the Soviet system, generally. With the retirement of Eisenhower from the Presidency, despite the fact that John Kennedy shared many of the impulses--that is, the Roosevelt legacy impulses, of Franklin Roosevelt--Kennedy was not in a position to control, effectively, the military-utopian, and associated group, which Eisenhower had called the "military-industrial complex." As a result of that, you had things like the assassination of Mattei in Italy; you had the Bay of Pigs--the invasion of Cuba by the utopian faction; you had the 1962 crisis, which was created by a utopian faction associated with Bertrand Russell; you had the assassination of Kennedy, in 1963; the attempted assassination of Charles de Gaulle in 1962; the early ouster of Adenauer in Germany; and similar kinds of things around the world. This led into the post-Kennedy period, and in 1965, the United States entered the Indochina war. This change was a fundamental change in the policies of the United States.

You can identify this by one other feature which was important: When Roosevelt died, at that time, something had happened in Italy. You had had meetings between the Emperor, diplomatic representative of the Emperor of Japan, Hirohito, through the Extraordinary Affairs Office of the Vatican, through [Cardinal] Montini, later [Pope] Paul VI. A friend of ours--I was not known to him at the time, but he knew me very well later--Max Corvo--who was the OSS chief in Italy, on the ground, who was involved in the process, of auditing some of things of that negotiation.

Then, Roosevelt died. The terms of prospective agreement between the Allies and the Emperor of Japan, had already been negotiated by the time Roosevelt died. Now, after that, Truman very quickly moved to decide to drop two totally unnecessary nuclear weapons on Japan--on Hiroshima and Nagasaki. Not only was this known to have been unnecessary--and the military specialists at the time knew it was unnecessary--Douglas MacArthur said so, the commander in the Pacific: that peace and surrender was imminent, as soon as the United States would deliver an assurance to the Truman Administration to accept Hirohito as the peace partner for the surrender. Eisenhower, in Europe, was consulted, and gave the strongest recommendation not to drop these unnecessary bombs, nuclear weapons, on Japan. They were dropped. The question is, why were they dropped? This gives you a key to understanding a lot of things that have happened since then.

So, the cultural destruction of the nations, the cultural destruction of the economy, the prohibition against technological progress by the so-called environmentalist movement--also created by Bertrand Russell--all of these things were part of an idea of creating a Utopia, whose potential most conspicuous feature of this utopianism was the military aspect: to create a mass of killers, called military and police, who would enforce the Empire, exterminate unwanted people, terrorize those they didn't exterminate, with that kind of military force which is now being deployed today.

So, that is what happened. This was the history of the past 35 years.

As a result of these policies, beginning about 1964-65, there was a fundamental change in the policy of the United States, which echoed what happened in Italy, following the Second Punic War. Italy had gone from a national area, which lived largely on the production of wealth within Italy itself--it became then, gradually, rapidly, especially after the failure of the Gracchi Reforms, became entirely a nation which was based on looting other nations: developing slavery in place of farmers; corrupting the population with bread and circuses, internally. And as the world, being conquered by Rome, was depleted and ruined, by this policy, the Roman Empire in West disintegrated, and moved to the East, where the population still existed in significant numbers. And that, only temporarily.

That was the objective. That's what we've been moving toward. We've moved toward a total destruction of everything that Franklin Roosevelt represented. It meant eliminate the idea of the General Welfare, which is the fundamental law of the United States--this is effectively eliminated today, an actual radical-positive Lockean policy dominates the U.S. Federal courts today. Eliminate all the things that enabled the reconstruction of the United States and Europe out of the Depression and the War. This is 1971: the elimination of the Bretton Woods agreement from a system of fixed-exchange rates, with a gold-reserve guarantee, or backing, and the promotion of low interest to maintain international loans, which enabled the development of developing nations, both as markets and internally. That ended.

Later, under the successor of Kissinger--Kissinger was the virtual dictator, or overseer of the Nixon Administration, for eight years; Brzezinski was the overseer and dictator of the Carter Administration for a period of four years. Twelve years of that set into motion a process which destroyed the character of the United States, in large degree. We made one last effort to prevent that, a couple of times. For one thing--my own effort, which became known as the Strategic Defense Initiative, which was an effort to stop this conflict between the Soviet Union and the United States, to bring it under manageable conditions, and open the door for development of the developing sector, to reverse, in effect, this ban on technological progress, to inverse the kinds of things which Kissinger stood for in National Security Study Memorandum 200.

So therefore, what do the people do? How do you speak to the people about matters like this? You say, "Well, look, it's now a long time, between 1945 and '46, since Roosevelt died. But Roosevelt did, under conditions of depression, from 1933 on, to the present, Roosevelt led the United States out of the Great Depression, through the war, and laid the foundations for a great period of reconstruction during the 20 years immediately following the war. This worked in the Americas; it worked for Japan; it worked in Europe, with the help of things such as Jean Monnet's work, and the Schumann plan. These things worked. It helped in other parts of the world as well.

Then, we destroyed the system, over the course of the 1961-65 period when the change occurred. Then, beginning with the coincidence of the launching of the Indochina war, we destroyed everything. And over the past 35 years, we've gone to a system which is now at its end, which is a great failure, the cause of great suffering.

So, let's take the two sets of facts to the people: Compare the two sets of facts. What was different between the Bretton Woods system, set into motion under Roosevelt's initiative, from the period 1945 to 1965; and the system we've had since, especially since 1971. Which one would you rather have? Would you rather have the inevitable doom of the present system, or would you rather learn the lesson of the success of the previous model, and start a reform, based on a successful experience of history. And that's why I use the term New Bretton Woods. Because, coming with a great reform, we're dealing with people as they are, poorly educated, less well-educated than they were 30 years ago. What do you do with such people, who are about to be destroyed by the ideas which they have upheld? You have to present the case to them in the simplest possible way. You say, "Let's compare what you and your parents and grandparents knew, and what you know. Let's look at the two periods: 1965 to the present, which led to a disaster, which is now occurring; and the period prior to 1965, the period of the Bretton Woods agreement, which was a success, despite the included injustices. So, let us go back to the lessons of successful reconstruction of the postwar world, and let us learn the lessons from that, and try this time, to take the benefit of the example, but without the injustices.

Thank you.